Wow, that was quick

by on June 16, 2009 at 10:07 am in Political Science | Permalink

Democrats on three House panels continue to meet privately to seek consensus on a single plan. Democrats on the House Ways and Means Committee said they were trying to decide whether to finance coverage of the uninsured with one broad-based tax, like the value-added tax, or a combination of smaller taxes.

The article is here.  I wasn't expecting that for years to come.  From my distant perch out here in Fairfax (and Arlington), I believe this means health care reform is falling apart.  It means the unions won't let them tax health insurance benefits and the CBO won't let them punt on the issue of finance.

Beezer June 16, 2009 at 10:15 am

“From my distant perch out here in Fairfax (and Arlington), I believe that means health care reform is falling apart.”

I don’t get this conclusion. It would appear that a flurry of action would indicate something is going to get done, not the opposite.

If you mean “watered down” reform, OK. But once Congress begins seriously discussing revenue means to support a program, then that is a good sign. A bad sign would be that they simply ignore how it’s going to be paid for because they know there won’t be anything passed.

Tyler Cowen June 16, 2009 at 10:26 am

A tax increase for those < $250k a year will not be popular and it also violates an Obama campaign pledge. If they are looking at that it means that other fiscal options are not faring too well.

Wowow June 16, 2009 at 11:00 am

$12,000 a year for one family’s health insurance?

I pay $840 per year. Granted, it’s only me, but it’s good insurance – about $3m lifetime. And it’s less than my auto insurance. Some friends of mine pay as little as $600 per year.

Do you have twelve family members? Or more likely does your “insurance” pay for things insurance should never pay for – fillings, regular visits, eyeglasses?

John Pertz June 16, 2009 at 11:07 am

Damn JB 12K a year. Do you not like to pay for visits to walk in clinics every time your child has a cough?

Andrew June 16, 2009 at 11:33 am

Taxes are taxes because the money goes to the government indirectly related to a collections for services, which are fees. Just because I HAVE to have bread, I am not paying a bread tax.

John Thacker June 16, 2009 at 11:35 am

Also Tyler, it’s not just “the unions” that don’t want to tax employer health insurance. It polls badly. That’s why President Obama used it as a line of attack in his campaign.

The polls pretty definitely show that the American people want and expect a free lunch on health care. They expect reform will be possible without cost. They oppose an individual mandate.

And politicians, especially President Obama, have done little to prepare them for that cost. In the campaign, when anyone else, whether Hillary Clinton or John McCain, brought up the idea of paying for reform in some way, Candidate Obama was swift to categorically rule that method out. He’s regretting it now, to be sure, but of course he wanted to win the election then.

Aurelia Masterson June 16, 2009 at 11:54 am

Obama is incapable of doing everything that he claims. Implementing this federal tax will not help at all. People will still have to pay for private medical insurance, though. This is to help 17 million people that do not have medical insurance, not the nation as a whole. It’s not going to withstand the test of time, and if he does all of this, he probably will not be reelected. It’s politics–he’s now so very clearly a politician and not a savior.

Neal June 16, 2009 at 1:02 pm

Screw the unions. Health insurance shouldn’t be tied to employment compensation, period. The higher we tax health insurance benefits, the more encouragement society has to move away from the entrenchment of health insurance as a form of payment.

Joe June 16, 2009 at 3:28 pm

The average cost of employer sponsored health insurance premium for family coverage in 2008 was $12,680 (of which the worker contribution was $3354). That is up from an average of $5791 in 1999, an almost 120% increase.

So for every one of your stupid schmucks paying $800 a year, someone else is paying a small fortune.

If we are playing as much as 30% too much for health care in this country then our inefficiency amounts to a “tax” of about $4000 per family.

Vulture June 16, 2009 at 3:52 pm

“Doesn’t that ignore the whole idea of insurance – we spread the cost for some unfortunate individuals across the population?”

The whole idea of insurance is that you pool *risk*, not cost. One of the big problems is that most people do not understand the difference, insisting that insurance is about the latter rather than the former.

DanC June 16, 2009 at 4:14 pm

Ok, so this is the new America. Americans increasingly spend an increasing percentage of their income on housing, housing that is increasingly lavish by historical standards. American families own more cars then ever and they are, by historical levels, filled with expensive add on features. Educations costs are escalating rapidly while education outcomes decline.

Yet the problem for the average American is health care? We have treatments for the average citizen that the richest man in the world could not buy 30 years ago. This is failure?

Or is the problem that government wants to promise more then it can deliver. Or do some Americans just want the government to pay their bills without any decline in access or quality.

If electronic medical records will generate huge savings, why has the market place refused to make changes?

If you have area variations in health care expenditure,s and compelling best practices to follow, why don’t private insurance companies have a huge incentive to implement those changes.

McAllen TX , the poster child for run away health costs, is a town with almost no private insurance, but some want to use this town as an example of why we need a government run system? Insane

What is the correct level of spending on health care?

And Democrats complain about government health care costs because they want to free up money they can throw at education, politically connected road crews, crooked community groups and a thousand other special interests groups.

They will cripple the health care system until it cannot survive without a full subsidy from Washington. How did that work out in the auto industry?

JB June 16, 2009 at 6:21 pm

“If electronic medical records will generate huge savings, why has the market place refused to make changes?”

Because the market place is not always efficient. Many private companies are notoriously slow at adapting to new technology, and there is a certain degree of inefficiency just built into the business world.

To use the health care analogy, taxpayers wouldn’t tolerate the head of a government organisation making $10+ million a year, but we ‘happily’ let Health Care executives make that because it’s standard practice in the corporate world. How about private jets? Company vehicles (efficient would be get people the cheapest reliable vehicle right? Not high end vehicles?)? I could go on.

John Thacker June 16, 2009 at 7:00 pm

I also think that the fact that our system as it exists is so deeply flawed it is certainly not a forgone conclusion that the US will decline by making our medical system more like those medical systems that get better healthoutcomes for less money.

It’s also certainly not a foregone conclusion that the US will get a medical system “more like those medical systems that get better healthoutcomes for less money.”

My theory is that we’ll get a system just like Medicare expanded to cover more people. But Medicare doesn’t get health outcomes for less money. The primary evidence about 30% inefficiency that people keep quoting are studies showing that in some places Medicare spends 30% more for equal outcomes.

I completely fail to grasp this magical argument whereby Medicare is unreformable now, but adding even more patients to the rolls will create the incentive for exactly the sort of cost-cutting reforms that people hated when the HMOs were doing them in the early ’90s, and got laws passed to prevent.

Jorge June 16, 2009 at 7:39 pm

Also: “Back in 1988, Harvard economist Larry Summers, now a key Obama advisor, explained that the reason the U.S. doesn’t have a VAT is because liberals think it’s regressive and conservatives think it’s a money machine. We’ll get a VAT, he said, when they reverse their positions.”

From http://www.forbes.com/2009/06/04/value-added-tax-opinions-columnists-bartlett.html.

Ricardo June 16, 2009 at 9:56 pm

$840 per year is what you pay for a high-deductible policy (mine was $3000) if you are 24 years old and in perfect health. This same policy gets much more expensive as you get older.

Wowow June 17, 2009 at 1:32 am

I am older than 24, I am not in the “best”/”safest” risk grouping, and I do not have the cheapest plan available from my health insurance company (it’s one of the majors). My deductible is high – as a rational averagely healthy persons’ should be – but my co-pay for routine visits is actually not too bad (I pay ~50% for routine stuff).

Crazed Robot June 18, 2009 at 2:02 am

You can’t just look at is just another added tax though, because presumably you will no longer need to pay for private medical insurance. Most of us can’t go without health insurance anyway, so even if it isn’t called a tax, private insurance is effectively a tax.

Between what my work pays and what I pay, it’s close to $12,000 a year for private insurance for my family. My tax rate would have to increase significantly to match that….

You are assuming that government health care will be of the same quality as private health care. What if, for example, you need to wait 6 months for an MRI (not uncommon in places with “Universal” health insurance), or the life-saving treatment you need is not covered (“Universal” health insurance often deny coverage for treatment)? Aren’t you having something taken away (i.e. taxed), even if it isn’t money?

If most Americans received the equivalent of Canadian health care (just as an example), they would feel they are receiving less health care than they are now. Essentially, you will be “taxed” waiting half a year for an MRI, or you will be “taxed” by not receiving the newest and most expensive cancer treatment… or, alternately, you will be taxed a much larger percentage of your income directly in taxes in order to avoid any sacrifices in healthcare.

You do understand there are tradeoffs, right? You aren’t going to get better healthcare, and expand that healthcare to everyone who doesn’t have it, AND pay less money for it. It just doesn’t work that way. Why is explaining this to people so controversial then?

It’s not as though Japan has so much less red tape or is a libertarian utopia but it’s auto industry has been successful.

While Japan is definitely not a laissez faire economy by any means, in Japan government regulation is centered around having a successful functioning market economy. In the United State regulation is a combination of political rent-seeking (environmental laws being selectively enforced against companies that don’t give money to the party in power, for example… or environmental laws centered around promoting a subsidize crop), and of the cheapest kind of special interest pandering (i.e. companies can be sued for millions if an employee is offended by several other employees discussing a Seinfeld episode in the lunch room).

To use the health care analogy, taxpayers wouldn’t tolerate the head of a government organisation making $10+ million a year, but we ‘happily’ let Health Care executives make that because it’s standard practice in the corporate world.

Of course, with socialized medicine here in Canada, we let the government equivalent of “health care executives” divvy out billions in no-bid contracts (see the latest eHealth scandal for the latest example). It would be naive to think government officials aren’t getting some pretty serious kickbacks. Government bureaucrats do make the kind of money you are talking about, they simply do it in the gray-market. They have to wait until they retire from their government position and accept that well-compensated “consulting” position for the companies that they used to hire as government employees.

You really believe there won’t be political rent-seeking when health care is nationalized?

it is certainly not a forgone conclusion that the US will decline by making our medical system more like those medical systems that get better healthoutcomes for less money.

All those European countries have externalized the effects of 18th and 19th century imperialism (France isn’t providing universal medicine to Haiti, or Indochina, or Algiers… unlike the United States whose 18th and 19th century enslaved underclass make up the majority of the uninsured). It is highly doubtful that the United States will be able to achieve those “better outcomes”, even by the flawed standards they are measured by, even if we fully adopt European style health care. The only way to achieve those kind of results would be to declare the descendants of African slaves, aboriginals, and oppressed immigrants as “non-citizens”, like Europe did through its racist “decolonial” process.

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